Despite past claims that other Atlantic Yards buildings beyond the arena will start next year, Chuck Ratner, president of CEO of Forest City Enterprises, parent of Forest City Ratner, today told investment analysts that no new construction would begin in 2010.
That contradicts statements in the Empire State Development Corporation's recent Technical Memorandum, which asserts that the construction schedule is essentially the same as before, just moved forward a few years.
The Technical Memorandum states that arena construction would begin in 2009 and three towers would begin in 2010. The memo also allows for a delay in Building 1 to 2014. (A real estate analyst, in a report for the Council of Brooklyn Neighborhoods, does not find the project timetable credible.)
"We have not started a single new building in 2009 and, other than the arena and a build-to-suit office building in Las Vegas for the city, we don’t plan to start anything in 2010," Ratner said today. "That’s a company that started almost a billion dollars a year four years in a row."
[I earlier interpreted this as Ratner saying that the arena wouldn't start until 2010; though he phrased it awkwardly, Forest City said in a press release Tuesday, "With the exception of the Barclays Arena at Atlantic Yards in Brooklyn, and the fee-development construction of a new City Hall project in Las Vegas, the Company does not anticipate commencing construction on any additional projects in 2009."]
Also answering questions about AY was Joanne Minieri, president and COO of Forest City Ratner. (The earnings conference call is available for online playback.)
Confident about arena
Early in the call, Ratner expressed confidence in the arena process:
We fully anticipate that the milestones necessary to close on Atlantic Yards and begin construction on the Barclays Center arena will be reached by year end. We’re working closely with public parties, including the MTA, the city, and the state to finalize and document the agreement. The mayor, the governor, and the borough president all continue to be fully and publicly supportive of our project.
We have made presentations to and continue to meet with the rating agencies and underwriters to enable us to move forward with a tax-exempt bond offering for the arena. Our sponsors, and particularly our partners from Barclays, have been steadfast in their support for the project.
On the legal front, project opponents have appealed a favorable 4-0 ruling we received in May on the eminent domain issue. This appeal is scheduled to be heard in October and we anticipate a favorable resolution shortly thereafter. While other legal objections undoubtedly will be raised, all parties involved are aware of these issues and continue to move forward to a closing by year end.
Progress beyond arena?
Some investment analysts raised questions, and Minieri hedged in her response.
Q: Can you give us a sense of additional capital that you’ll need to spend, I guess, in the next year or so, in development plans beyond the arena?
JM: As Chuck indicated, we do expect that, before the end of the year that the state would ratify the Modified GPP. Then we would raise the bond financing necessary to proceed with the project. We continue to manage the cash requirements necessary to proceed and have adequate cash, in our estimate, to fulfill those obligations.
CR: As we indicated… we have in our sources and uses provided adequate liquidity to close the transaction.
Q: Are you anticipating any further development beyond the arena at this point?
JM: Obviously, the arena will be the first building that we will begin to develop. Within several months, we will expect to proceed with the first residential project. Y’know, it’s so interesting, because the arena has taken the spotlight of this development. But as we all know, the majority of this project provides for a housing development. So we fully intend to fulfill our obligations under the project plan, so we will proceed.
More capital needed?
Q: Putting dollars around the amount that you plan to raise, I think the number being out there was around 700 million [dollars] and that the cost of the arena was going to be between 8 and 900 million. I’m just wondering, that incremental 100 to 200 million, do you already have that invested--is that 800 to 900 million inclusive of what you’ve already invested into the property?
JM: Yes, it is.
Q: Okay, so then the incremental amount would only be in probably the 50 to 70 million range--is that a pretty good estimate?
JM: Plus or minus. Probably a little bit more, but yes, it’s a reasonable estimate--it may be a little higher, as we close down all the numbers….
CR: I want to repeat that the equity it’s going to take to close this transaction we have anticipated.